Mattel Reports Q3 2013
Mattel, Inc., reported its 2013 third quarter financial results. For the quarter, the company reported net income of $422.8 million, or $1.21 per share, compared to last year’s third quarter net income of $365.9 million, or $1.04 per share.
“We are pleased with our third quarter performance as Mattel delivered growth in every region of the world, expanded our operating margins, further strengthened our balance sheet, and returned more capital to our shareholders,” said Bryan G. Stockton, Mattel chairman and CEO, in a statement. “As we enter the all-important holiday season, we have a strong lineup of innovative products, promotions, and content, and we will continue to focus on execution to deliver growth and long-term shareholder value.”
For the quarter, net sales were $2.21 billion, up six percent, including an unfavorable change in currency exchange rates of one percentage point. On a regional basis, third quarter gross sales increased three percent in the North American region, which consists of the U.S., Canada, and American Girl, with no impact from changes in currency exchange rates. For the International region, gross sales increased nine percent, including an unfavorable impact of currency exchange rates of two percentage points. Operating income for the quarter was $528.2 million, compared to prior year’s operating income of $487.4 million.
The company’s debt-to-total-capital ratio was 36.5 percent. For the first nine months of the year, the company’s cash and equivalents decreased by approximately $929 million, compared with a decline of approximately $1.09 billion during the same period last year.
For the first nine months of the year, cash flows used for operating activities were approximately $321 million, an increase of $220 million compared to approximately $101 million of cash flows used for operating activities in the same period of 2012. The increase is primarily due to higher working capital usage, partially offset by higher net income. Cash flows used for investing activities were approximately $176 million, a decrease of $657 million, compared to approximately $833 million in 2012, driven primarily by the prior year acquisition of HIT Entertainment. Cash flows used for financing and other activities were approximately $432 million, an increase of $279 million, compared to approximately $153 million in 2012, primarily due to higher share repurchases and repayments of long-term debt, partially offset by net proceeds received from the issuance of long-term debt.
Mattel announced that its board of directors declared a fourth quarter cash dividend of $0.36 per share on the company’s common stock. The dividend will be payable on December 13, 2013, to stockholders of record on November 27, 2013. The dividend is the final of four quarterly dividends the company will have paid this year, reflecting an annualized dividend of $1.44 per share, which represents a 16 percent increase to last year’s total dividends. During the third quarter of 2013, the company repurchased 6.1 million shares of its common stock at a cost of approximately $259 million.
Mattel Girls and Boys Brands
For the third quarter, worldwide gross sales for Mattel Girls & Boys Brands were $1.48 billion, up 8 percent versus the prior year. Worldwide gross sales for the Barbie brand were up 3 percent. Worldwide gross sales for Other Girls Brands were up 28 percent, primarily driven by Monster High. Worldwide gross sales for the Wheels category, which includes the Hot Wheels, Matchbox, and Tyco R/C brands, were down 9 percent, primarily driven by Tyco R/C and Matchbox. Worldwide gross sales for the Entertainment business, which also includes Radica and Games, were up 7 percent, primarily driven by the Disney Planes movie property.
Third quarter worldwide gross sales for Fisher-Price Brands, which includes the Fisher-Price Core, Fisher-Price Friends, and Power Wheels brands, were $789.3 million, or flat versus the prior year.
American Girl Brands
Third quarter gross sales for American Girl Brands, which offers American Girl-branded products directly to consumers, were $122.3 million, up 20 percent versus the prior year, driven by Saige, the 2013 Girl of the Year, My American Girl, Bitty Baby, and historical dolls.